By JAMES CHEN
Reviewed By GORDON SCOTT
Updated Sep 6, 2020
What Is Investment Income?
Investment income is income that comes from interest payments, dividends, capital gains collected upon the sale of a security or other assets, and any other profit made through an investment vehicle.
Generally, individuals earn most of their total net income each year through regular employment income. However, disciplined saving and investment in the financial markets can grow moderate savings into large investment portfolios, yielding an investor a large annual investment income over time.
Interest earned on bank accounts, dividends received from stock owned by mutual fund holdings, or sales of gold coins held in a safety deposit box are all considered investment income. Often, income made on investments undergoes different—and sometimes preferential—tax treatment, which varies by country and locality.